Social media connects us in ways that would have seemed impossible 20 years ago. Now, we can share pictures of our 20th wedding anniversary, buy a secondhand lawnmower, and even hop on group chats with old high school friends simultaneously. It’s a great place to stay in touch, make new friends, and even get a little shopping in. Despite all the good things, Federal Trade Commission’s (FTC) reports show that social media is quickly becoming the place where bad actors can easily scam us out of hard-earned cash.
On Thursday, January 27, 2022, Cyberscoop reported on the FTC’s 2021 annual social media fraud calculations. The FTC stated that 95,000 people suffered an estimated $770 million in financial losses. Malicious actors conducted their fraudulent activities on various social media platforms. Five years ago, 5,000 victims sustained $42 million in losses. In half a decade, these numbers accelerated to an additional $728 million in deceptive forfeitures. So, what has changed in the past 5 years?
What caused the surge in record financial losses on social media?
According to Thursday’s report, Cryptocurrency scams are the major culprit in the dramatic increase. In 2021, investment scams made up 37% of all reported fraud losses originating on social media. Commonly, scammers use social media platforms to promote bogus investment opportunities. These bad actors target people with promises of a get rich quick investment scheme. The unknowing victims bite the bait and send their money, often as cryptocurrency, and never see a dime of it again.
Online shopping scams were the cause of 45% of the reported frauds. Unsuspecting buyers would place an order after seeing an ad, but never receive their merchandise. These consumers would describe ads that impersonated real online retailers which drove them to lookalike and fake websites. Facebook and Instagram seem to be these threat actors’ weapon of choice 9 out of 10 times so be wary.
The FTC points to romance scams or “catfishing” as the second most profitable fraud on social media after investment scams. In 2021, romance scams contributed to $185 million in fraudulent losses.
The bad actor’s romance scam playbook is simple:
- An innocent stranger receives an unexpected friend request on a social media platform.
- The bad actor engages in a lot of friendly conversation and emotional connection with the target.
- The malicious actor builds up the emotional anticipation of romance.
- The threat actor persuades the unsuspecting victim to give them money.
- The “cat fisher” receives the money and disappears.
- The injured party never hears from that person again.
More than a third of the fraud victims stated the online romance scam began on Instagram or Facebook.
The ubiquitous use of social media across all corners of the globe makes it an attractive playground for hackers. Therefore, make sure you and your loved ones play it safe by following the precautions below.
How to protect yourself and your family on social media:
- Set restrictions on your social media privacy settings. You’ll want to consider limiting the amount of information you share to third-party applications. You should also think long and hard about who can see your posts on social media.
- Opt-out of targeted advertising. Opting out means that the platform you’re using cannot use or sell your personal data to advertisers that will use it to sell you things. Social channels are huge private data harvesting farms so opt-out if you’re able to or move to a different platform that offers you this option.
- If a “friend” urgently requests money, be VERY vigilant. Your friend’s social media account was probably hijacked. If you’re unsure, immediately cease communication via social media and call your friend directly. Malicious actors will typically ask you to pay by cryptocurrency, gift card, or wire transfer because they are difficult to trace.
- If someone appears out of nowhere to strike up a friendship or romance, SLOW DOWN. Read about romance scams and NEVER send money to someone you haven’t met in person.
- Do your due diligence and research a company before buying from them. Search reviews, Google the name of the company and “scam” or “compliant,” or search for the company on the Better Business Bureau website. You’ll be very glad you did.
If you’d like to learn more how we can protect you from being scammed online, click here.